Detecting Misrepresentation and Fraud During M&A Due Diligence
- Mar 1-3, 2023 10:00 a.m.
- Central Time (CT)
Time constraints and the pressure to get deals “done” in mergers and acquisitions (M&A) can lead to a failure to identify false information, misrepresentation, and fraud in the due diligence process. This course will prepare participants to incorporate specific approaches to detecting misinformation and fraud during M&A due diligence. Varied application of accounting principles, business complexity, and process changes can all conceal misrepresentation during M&A, and misleading information and fraud can be overlooked when there is not an intentional effort to identify them.
Recognize how traditional due diligence can miss fraud and misrepresentation.
Explain why fraud carve-out provisions are not enough protection.
Identify how the Fraud Triangle plays a significant role in M&A.
Detect the most common types of seller misrepresentation and fraud.
Apply methods to detect financial statement manipulation and fraud.
|Delivery Method:||Group Internet Based|
ACFE Members: $625
Early Registration Deadline: January 30, 2023
Register by the Early Registration Deadline to SAVE $125!
M&A transactions deal with the buying, selling, dividing and combining of different companies and similar entities. In this session, participants will learn about the various types of M&A activities, key M&A processes and the parties involved and common challenges experienced during M&A transactions. This session will also explore common areas of M&A due diligence, including commercial, financial, operational, legal and other considerations.
Valuation in M&A transactions involves assessing numerous factors, and considerations vary based on whether the target is privately held or publicly traded. In this session, participants will discuss various valuation frameworks, as well as different approaches and considerations for analyzing the financial statements of public and private organizations.
Within M&A transactions, significant motivations and pressures to engage in fraud can exist on both sides. Using real case examples as illustrations, this session will cover how fraud can occur and be concealed within M&A, as well as how fraud carve-out provisions can be used to protect a buyer in the event the seller fraudulently misrepresents information during the transaction. Participants will also explore how the Fraud Triangle appears in M&A situations and what red flags to watch for that could indicate something is amiss.
Due diligence in M&A transactions involves gaining a thorough understanding of the target’s business processes, financial conditions and performance, the regulatory environment and compliance programs, and the organizational culture, among other factors. In this session, participants will discuss the various types of information to be gathered during M&A due diligence (e.g., finance and accounting, IT, compliance, internal controls), as well as common pitfalls in each of these areas that can result in missing vital information.
The target company in an M&A transaction has a motivation to maximize the purchase price of the company. While most M&A targets will pursue this goal honestly, this motivation can also serve as a pressure to consider fraudulently inflating the financial statements. This session will explore areas of high risk for manipulation in the target’s financials, including liabilities and assets, revenues, and estimates and valuations.
Knowing the red flags of financial statement manipulation, as well as effective methods to detect and investigate them, is vital in recognizing when something is amiss during M&A due diligence. This session will teach participants various analytical methods and models that can be used to spot the warning signs of financial statement fraud, including forensic accounting techniques, ratio analysis and the Beneish M-Score Model.
The possibility of corruption and asset misappropriation schemes can also add risk to an M&A transaction, such as bringing potential legal or compliance challenges for the acquisition of a target with known violations. In this session, participants will become familiar with red flags to watch for and ways companies can limit their liability with regard to these schemes.
This session will provide numerous techniques participants can use to uncover and assess the risks of corruption and asset misappropriation during due diligence procedures in an M&A transaction, including financial ratios, data analytics such as Benford’s Law analysis, and other methods to spot trends, patterns and concentrations that could indicate problematic areas for further investigation.
Founder and Managing Partner
Payment must be received by January 30, 2023 to receive early registration discount.
Our cancellation policy is intended to keep costs low for attendees. Due to financial obligations incurred by ACFE, Inc., you must cancel your registration prior to the start of the event. Cancellations received less than 14 calendar days prior to an event start date are subject to a $100 administrative fee. No refunds or credits will be given for cancellations received on or after the start date of the event. Those who do not cancel and do not attend are responsible for the full registration fee. Should an event be cancelled or postponed by the ACFE due to unforeseen circumstances, the ACFE will process a full refund of registration fees within 30 days of such circumstances becoming known. The ACFE will attempt to notify affected customers by phone and email after it determines cancellation is necessary.
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The Association of Certified Fraud Examiners, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: www.nasbaregistry.org.